Swiss vote against initiative requiring central bank to acquire more gold
Investors bearish as voters reject proposal for Swiss National Bank to raise portion of HK$4.2 trillion assets held in the metal to 20 per cent
As Switzerland rules out that its central bank will be the next big buyer of gold, sending prices to the lowest in more than three weeks, there is one more reason for investors to be bearish.
Had it been approved, it would have led to purchases of at least 1,500 tonnes over five years. With lower oil prices reducing costs for consumers and the United States considering raising interest rates, demand is fading for hedges against inflation such as gold.
Gold has lost 19 per cent since peaking in March and investor holdings of exchange-traded products are near a five-year low.
While prices probably would not be affected too much by the "no" vote of the initiative called "Save Our Swiss Gold", approval would have improved sentiment and increased prices by as much as US$50 an ounce, HSBC Holdings said last month.
"Gold had received some support in the last couple of weeks" before the vote, said Georgette Boele, an analyst at ABN Amro Bank in Amsterdam. "We'll get more pressure on gold. The overall outlook is not looking great."